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How to Know if Your Business Needs a License to Operate

July 9, 2025 by BPM Team

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Starting a business is an exciting and daunting prospect, in equal measure. You want to hit the ground running and start turning your dreams and aspirations into a functioning business.

However, before you start selling products or services, you need to know whether your business requires a license to operate on the right side of the law. Depending on what you intend to sell, it’s a good idea to carry out online searches such as how to get tobacco license Florida, for instance, to get the guidance and help you need.

If you don’t do the due diligence and get your licensing requirements sorted, you could be facing fines, shutdowns, and a whole world of legal headaches. What’s tricky about this scenario is that licensing requirements vary by state, industry, and even city. 

Here’s a general overview of what you need to know and do.

Business license basics

In general terms, a business license is official permission from the government to operate your business. It ensures that you’re complying with local regulations, taxes, zoning, and safety laws. 

Most businesses, regardless of whether you are online or have a physical store, will need at least one type of license or permit.

Does every business have to be licensed?

Although not every small side hustle needs a complex license, most legitimate full-time businesses do. If you’re doing any of the following, chances are you’ll need a license.

  • Selling goods or services either online or face-to-face
  • Operating under a business name
  • Employing staff to help you with the business
  • Leasing or renting a commercial space
  • Dealing in regulated products like alcohol, firearms, or tobacco

If you meet any of those descriptions, at a minimum, you’ll likely need the following:

  • A general business license from your city or county
  • A federal EIN (Employer Identification Number) if you have employees
  • A sales tax permit if you’re selling physical goods

Do You Need a Tobacco License?

To give you a clearer picture of the sort of licensing requirements involved in running a business, let’s look at what’s needed if you’re planning to sell cigarettes, cigars, vaping products, or other tobacco-related goods. Under these circumstances, a general business license is not enough. 

You’ll need a tobacco license. You should also be aware that the rules for granting a license are strict.

Here’s some key points that you need to know. Firstly, a tobacco retailer license is required at both the state and sometimes local levels. You may also need a federal permit if you’re importing, manufacturing, or distributing tobacco products.
In addition, you must comply with age verification laws, labeling requirements, and tax rules specific to tobacco. Also, be aware that, in many states, even selling e-cigarettes or vape juice requires a tobacco license.

Finding out what you need

A good starting point would be to contact your city or county clerk’s office or check their website for local requirements. There are some useful online tools that also offer helpful step-by-step guidance. Websites like SBA.gov and IRS.gov are good reference points.

In addition to local resources, check state requirements. Your state’s Secretary of State or Department of Revenue will list industry-specific licenses.

In summary, don’t ever be tempted to skip any aspect of the licensing process. This can end up costing you way more than doing it right from the start.

Also read: What Are Some Of The Aspects Of Starting A Business?

Image source: elements.envato.com

Filed Under: Legal, Start-up Tagged With: compliance, legal tips, starting a business

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